As Malaysia eyes post-pandemic recovery, policymakers must find ways to help us withstand future shocks.

by Yohendran Nadar Arulthevan

MALAYSIA’S high vaccination rates and protracted lockdowns have resulted in a steady decline in Covid-19 cases since its peak in late August. Malaysians now have more freedom to indulge in activities, such as dining out, going to the movies, and travelling for leisure. Amid these positive developments, we must be mindful that the challenges from the pandemic are far from over.  

First, according to the Labour Force Report published in December 2020, more than 710,000 people lost their jobs last year, up from 508,200 in 2019.  

More than 30,000 businesses went bust between March and November 2020, reports the Entrepreneurship Development and Cooperation Ministry.  

These job losses and business closures resulted in sharp declines in household incomes and savings. Despite the introduction of various pro-labour policies, such as job retention schemes, unemployment insurance and hiring incentives, the primary goal of these measures was to mitigate the impact of the pandemic in the short term. But given the severe impact of the crisis on Malaysia’s labour market, there is still need for government intervention.  

Second, the government has extended billions of ringgits in direct cash transfers to households since the start of the pandemic last March. The assistance has been an economic lifeline, but concerns remain over the efficacy of the targeted distribution of cash transfers. Instead, the government can expand the handout beyond basing it on households’ income levels and size to include in which state recipients reside and number of school-going dependents, among others. 

These challenges indicate that while the pandemic might be shifting to an endemic stage soon, its ramifications are far from over. As cases decline and as movement restrictions ease, the focus should now shift towards addressing the long-term ramifications of the crisis.  

The pandemic offers an opportunity to rethink our approach to building the resilience of households to deal with unanticipated shocks. We can achieve this by tackling the systematic issues across income groups, such as the gaps in our social protection systems and labour market inequalities. Pic courtesy of Unsplash

The pandemic offers an opportunity to rethink our approach to building the resilience of households to deal with unanticipated shocks. We can achieve this by first tackling the systematic issues across income groups, such as the gaps in our social protection systems and labour market inequalities. 

We need more robust employment policies to strengthen our labour markets in the long run. The public and private sectors need to work together to address the skills gap and boost workforce readiness.  

Continuing the reskilling and upskilling programmes is also critical in helping Malaysians navigate the disruptions brought by the pandemic and deal with the technological revolution. 

Our social security schemes must also become more inclusive. We need to widen the accessibility of our social protection systems to all members of society, especially the vulnerable employed in the informal sector, by breaking down the silos in our social protection systems. We need to develop a system that recognises and can provide protection to workers and households despite the diversity and fluidity of their circumstances. 

In an upcoming report that will be published on the ISIS website in October, we will explore these issues further within the context of the middle class in Malaysia. We will analyse the effectiveness of support measures, share the insights of M40 households based on personal interviews, and propose suitable policies for the long-term recovery and growth of our middle-class households.  

Finally, experts focusing on Malaysia’s post-Covid-19 recovery will elaborate on this topic at the upcoming PRAXIS 2021 conference on 21-22 October. 

The writer is a research intern at the Institute of Strategic and International Studies (ISIS) Malaysia.

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